Costs Of Reorganization Blamed

Utc Expects '91 Loss, First Time In 20 Years

United Technologies Corp. announced late Tuesday it would report a loss for 1991, the first annual loss for the state's largest private employer in 20 years.

Robert F. Daniell, UTC chairman and chief executive officer, attributed the projected loss to expenses from a previously announced corporate cost-cutting campaign. The Hartford-based company has said it plans to cut $1 billion in annual operating costs by the end of 1993.

The size of the loss, which includes the costs of paying severance and early retirements, has not been determined, UTC said.

UTC, however, recorded income of $203 million for the first three quarters of 1991, so the loss for the fourth quarter, which ends Dec. 31, would have to exceed the gain from the first nine months.

Cuts in defense spending and a national recession have combined to cut into sales of the company's military hardware, airline engines, elevators, air-conditioning systems and automotive parts.

The company has announced staff reductions at its headquarters and its divisions. Its Pratt & Whitney division has also said it is looking at consolidating and closing plants in the state.

Industry analysts have said the company's cost-cutting campaign could also include trimming other overhead expenses, revamping production methods, shedding unprofitable lines or selling smaller divisions.

Daniell, however, said in a prepared statement: "Despite its negative effect on this year's earnings, the cost-reduction program will position the company for growth and improved profitability during all economic cycles.

"The positive impact of earlier cost reductions is already being felt, which confirms our belief that this program will have a beneficial long-term effect."

Industry analysts said they expected the cost-cutting program would carry a big price tag.

"You can't cut costs without taking charges," said Kent A.

Newcomb, an analyst with A.G. Edwards & Sons in St. Louis. "You've got to pay severance charges, provide for potential asset write-downs or facility closings. Those things all cost money."

Nicholas Heymann, an analyst with County NatWest Wood Mackenzie in New York City, agreed. He estimated the charge will be "at least half a billion to three quarters of a billion for this restructuring."

Besides Pratt & Whitney, UTC includes Otis Elevator, Carrier Corp., Sikorsky Aircraft, Norden Systems and Hamilton Standard, all based in Connecticut, and UT Automotive, based in Detroit. Dan Harrison, a spokesman for UTC, said the company is set to notify the Securities and Exchange Commission in a filing today that it expects the annual loss.

Tuesday's announcement came after the close of the New York Stock Exchange where UTC's stock ended the day at $49.62 1/2 a share, down 25 cents a share.

Last year, UTC reported record income of $750.6 million and earnings of $5.53 per share on revenues of $21.8 billion. For the fourth quarter of 1990, the company earned $168.8 million or $1.24 per share. Revenues that quarter were $5.9 billion.

The last time the aerospace and defense giant reported an annual loss was in 1971. That year, the company -- then known as United Aircraft Corp. -- reported a loss of almost $44 million, because of expenses tied to development of the engine for the Boeing 747 airliner.

At that time, company officials said the charges it took would help position United Aircraft for the future. After business improved and new acquisitions added to the diversity of its products, the company changed its name to United Technologies in 1975.

Daniell said Tuesday that the cost-cutting plan is on schedule. In announcing the plan last August, he said details had not yet been worked out. Tuesday, he said he plans to disclose details of the cost-cutting in January when UTC reports its year-end results.

UTC divisions have eliminated more than 4,000 jobs in Connecticut so far this year, primarily at Pratt and Hamilton Standard. Last month, UTC announced plans to cut its 1,000-person corporate staff by a least 25 percent -- 250 jobs or more -- in the next few months. About 670 corporate employees work downtown in the Gold Building and State House Square.

This is not the first time in recent years that UTC has taken large charges for restructuring costs. In 1986, the company took a fourth quarter restructuring charge of $593 million -- before taxes -- but it ended the year with income of $73 million. For that fourth quarter, the company reported a loss of $228 million.